2015 – The expansion of Bitcoin use in the retail environment?

During the Christmas period I had my first encounter of the Bitcoin in the retail environment when I paid a visit to my local CeX store to exchange some games for my Playstation 4.

They were games that I’ve finished playing and I thought it would be the ideal time to trade them in for something new. Unfortunately, I couldn’t find anything that took my fancy so I was offered the price as store credit or alternatively as Bitcoins. I played it safe and opted for store credit, but was intrigued by how Bitcoins would work in the retail environment.

The rise of the Bitcoin

I had remembered reading that electronic retailer CeX had become the first high-street retailer in the country to use online currency Bitcoin as a trial in its Glasgow store, but I wasn’t aware that it had been rolled out nationwide. It makes sense in a way, CeX have identified their customer base and it’s quite clear they live and breathe technology so why not use Bitcoins as a way to buy and sell electrical goods?

Bitcoin is a virtual currency that works without the need for a central bank. Because Bitcoins can be transferred directly from one person to another they are sometimes described as digital cash. The number of consumers wanting to pay by Bitcoin is small but is growing quickly. Bitpay recently estimated the number of users is growing at 30% a month and 8 fold year-on-year.

Bitcoin payments are instantaneous, but they take 10 minutes to be confirmed by a block chain. Retailers will need to decide whether to opt for “zero-confirmation” transactions, which means they take the risk of accepting a transaction that has yet to be confirmed by the block chain. Alternatively, they can wait 10 minutes for confirmation.

It isn’t short of being involved in controversy either. There are multiple stories about exchanges being shut down with customers’ wealth being lost in the process. But as a form of payment for products and services, the currency has seen growth, and merchants have an incentive to accept the digital currency because fees are lower than the 2–3 per cent typically imposed by credit card processors.

Here to stay?

The question for other retailers now is whether this is a valid route to pursue within their store environments. I can see the benefit of using the technology online but I question its use in an retail environment.

When a Bitcoin payment happens, the processor does a quick check that the transaction has gone through and is genuine. The risk level with Bitcoin payments is very low and, for small-ticket items, it’s probably OK to hand over goods without waiting for the full security check. But for a £1,000 transaction it would require the full 10 minutes. Would a consumer really want to wait for 10 minutes at checkout for it to be approved?

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